Hindalco yet to get any coal, even 8 years later

October 17, 2013 13:09 IST

Hindalco will have to buy coal from other sources at a very high cost for its Rs 17,000-crore (Rs 170 billion) aluminium project in Odisha, as its Talabira mine is yet to receive Stage-II clearances from the Union environment ministry. The mine is at the centre of an investigation by the Central Bureau of Investigation (CBI) for what it claims is the government’s undue benefits to Hindalco.

The coal block was allocated to Neyvelli Lignite, Mahanadi Coal and Hindalco in 2005 but till date no work has started at the site. Neyvelli has 70 per cent share of the mine, while Mahanadi and Hindalco have 15 per cent each.

CBI has filed a First Information Report (FIR) against Aditya Birla Group Chairman Kumar Mangalam Birla and Hindalco for “influencing” the government to get the coal block allocated to the company. According to CBI, the block was first allocated only to a public sector unit in April 2005 but Hindalco received a 15 per cent share in the mine after Birla met the then coal secretary.

According to observers, unsubstantiated allegations are being made against a respected industrialist. Birla, they said, made several representations to the government as any corporation would normally make in such circumstances. They point out that the group has spent Rs 15,000 crore (Rs 150 billion) and provided 10,000 jobs in one of the most backward areas of the country and it is ridiculous to suggest that Birla got any undue benefits.

“All processes were followed and the mine was allotted not for trading but for a project for which huge investments has been made. It’s not Birla who decides on the mine allocation process. Why blame him now?” said an independent observer.

The first application for the Talabira-II mine was made by Indal way back in 1996. After the company was acquired by Hindalco in 2000, it was allocated the mine in November 2005. However, no production could start at the site for want of environment clearances. Observers pointed out that this in itself suggests the industrialist did not get any undue benefits.

They added that this is an insult to the government itself if anybody suggests that a single company managed to overturn the decision of the screening committee set up to monitor all mining approvals.

The Aditya Birla Group made the investment decision in Odisha after it was promised low-cost coal and bauxite by the government. However, without access to a coal mine, the project cost will shoot up substantially, analysts warned.

According to observers, the only reason the coal mine was allocated to Hindalco was because the company was investing Rs 17,000 crore in an aluminium project in Odisha. In fact, the state’s chief minister, Naveen Patnaik, had intervened on behalf of the company and had written to Prime Minister Manmohan Singh to allocate the mine to the company as lots of jobs were expected to be created in the state.

In November 2005, Talabira-I and Talabira-II mines were converted into one block and Hindalco was given 15 per cent share in the mine. The amalgamation was to reduce production losses due to demarcation of boundaries between the two mines.

The CBI started investigation into the entire coal mining allotment scam after the Supreme Court asked it to file a report based on a report by the Comptroller and Auditor General of India (CAG), which pegged the government’s loss at Rs 1.8 lakh crore (Rs 1.8 trillion). The CAG had said the losses occurred as the mines were not auctioned.